Bookkeeping services use the cash basis method for many small businesses without inventory. Under the cash basis method of accounting revenues are reported when the business has received them. Expenses are reported when they are actually paid for. Accrual accounting recognizes revenue when you have sold and delivered goods and when services have been performed. Cash does not need to be received to in order to record revenue. In other words, revenue is recognized when earned and expenses are recorded when incurred. So for example, if your employees perform a service for your customer you record, the revenue earned and expense the payroll incurred while hiring employees.

The use of accrual or cash basis accounting can have a significant affect to financial statements. The income statement shows readers the revenue and expenses for a business. If bookkeepers were to switch from accrual basis to cash basis accounting you would be able to see a significant difference in the company’s profit.

Lets suppose your window washing business has just provided services for a large building. After completing the job you are promised $600 but only given $400 in cash. The rest of the money will be paid later in the year. Your business also incurs expenses that total $300. Your window washing business pays $150 in expenses right away and the rest will be paid later.

If a bookkeeper or accountant was to record the transactions under each method you would see different figures for the income statement. The accrual method of accounting shown below on the left side shows a higher profit. The cash basis method of accounting shown below on the right side shows a lower profit.

As you can see depending on the accounting method the income statement will show you different figures. Most small businesses can justify the use of the cash basis because there are few transactions. Medium and large businesses will use the accrual method.

Source:
Honorino Lora – About the Author:
Honorino provides portland bookkeeping services. Besides freelance bookkeeping in Portland, Tigard, Beaverton, Hillsboro and the metro area he also writes articles on accounting and bookkeeping topics.

http://www.articlesbase.com/accounting-articles/bookkeeping-services-and-accounting-methods-they-use-5692566.html

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Maintaining company’s financial transactions in a log book is sensitive job, but necessary nevertheless. There’s not a soul in this world who will advise you against bookkeeping. It is important and required by law. Having a trusted bookkeeper or hiring a reputable bookkeeping service comes with a number of advantages. One of them being on-time submission of documents to the government, come end of financial year. Though many know about it, there are still many who are unaware of different types of bookkeeping systems. Each system has its own set of advantages and disadvantages. It’s important to know the differences between them, to be able to select the one that suits your company needs most.

Bookkeeping generally deals with daily recording of business assets, liabilities, income and expenses in books, journals and ledgers chronologically. As mentioned before these services can be acquired through hiring full-time or outsourcing bookkeeping jobs. There are two common types of bookkeeping systems and they are: Single Entry Bookkeeping System

In single entry booking system, maintenance of financial information relies on one sided accounting entry. Very similar to the way a checkbook register is maintained, with additional columns of income and expenses to various income and expense accounts. Separate accounts are recorded for petty cash, accounts payable receivable, travel expenses and other relevant transactions.

It is perfect for companies whose volume of activity is low. Hence, single entry bookkeeping is considered best for small businesses. Other advantages of this system is that they are usually less expensive to implement and less time consuming since there’s no requirement of including equal debits and credits to the balance sheet and income statement accounts.

Disadvantages of single entry bookkeeping system include no recording of detailed financial information. Locating a mistake or error can be difficult in this system and are sometimes only possible through bank statement reconciliation. There’s no link between balance sheet and income.

Double Entry Bookkeeping System
A boon for large businesses, this system is usually meant for those companies who have numerous assets, thousands of transactions and various external capital suppliers. It requires recording of every transaction at least on two different ledgers, one being a debit account and the other a credit account. Since each and every entry in debit column is equal and opposite of the entry duly made in credit column. This means that the sum of all debits must be always equal to the sum of all credits.

This system is advantageous when it comes to finding mistakes and errors. Financial statements can be prepared directly from the accounts. Double entry bookkeeping makes it easier for bookkeepers to calculate profit and loss statements accurately. Assets and liabilities can be included which was not the case in single entry bookkeeping system.

The disadvantage of double entry bookkeeping system is that it is more time-consuming since each entry is made twice. It is also harder to understand. But these disadvantages hardly count if you hire a reputed and qualified bookkeeper Services offered by various bookkeeping companies include consultation, payroll, AR and AP Tracking and cash-flow management among others.

If bookkeeping isn’t your specialty then you shouldn’t dwell on it. Rather, you should focus on your products, services and customers and outsource your bookkeeping miseries.

Source:
David Bradsher – About the Author:
The author of this article is professionally associated with Bay Business Group, a leading bookkeeping company. Bay Business Group offers business planning, tax planning and payroll among other bookkeeping services Arlington Alexandria, Silver Spring and surrounding residents can hire them at very reasonable fee.

http://www.articlesbase.com/accounting-articles/types-of-bookkeeping-systems-5714695.html

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Solution:
So here are five practical steps to start learning finance and business:

Read an introductory book on personal finance
In my opinion, starting with personal finance is a good way to learn finance and business. It is from personal finance that you get the most applicable ideas for your life. Isn’t it ironic if you know a lot about finance and business but have your own personal finance in a mess?

So I’d recommend reading a book that introduces you to all important aspects of personal finance. For this purpose, I like the book Personal Finance by Kapoor, Dlabay and Hughes. It is very readable, and cover all important aspects of personal finance like budgeting, consumer credit, housing, insurance, investing, and retirement. The book is also very scannable; you can easily scan through it to grasp the main ideas of every part.
The book is expensive ($132.19), but I borrow it from the library for free. If you can’t get it, don’t worry, you can always read other books. The bottom line is the book should introduce you to all important aspects of personal finance.

Subscribe to a personal finance blog
Subscribing to a personal finance blog will help you apply the principles of personal finance in your daily life. It will remind you of the principles you have learned, help you learn new principles, and most importantly help you put those principles into practice. The blog I like is Get Rich Slowly. The tips and experiences shared there are very useful and practical.

Subscribe to a personal finance podcast
Similar to my previous point about blog, subscribing to a personal finance podcast is a good way to help you put personal finance principles into practice. The podcast I like is Money Girl. It’s short (often less than five minutes), very easy to understand and contains a lot of practical tips.

Subscribe to a business podcast
Now we move from personal finance to finance and business in general. A good way to start is subscribing to a business podcast. There are many business podcasts, but the one I like most is HBR Ideacast for one simple reason: it gives me preview of the newest business ideas.
The podcast often features interview with the authors of new business books. By listening to this podcast alone, I can quickly get the main ideas of those books. In some cases, I get enough from the podcast that I no longer need to read those books. It saves me a lot of time while keeping me up-to-date with the newest concepts in the business world.

Read an introductory book on finance and business
Eventually, to get deeper knowledge about finance and business, there is no choice but to read “real” finance and business books. By “real” here I mean something that uses those jargons MBAs talk about in their conversations about business.
Fortunately, there are books that can help you get there in relatively short time. The book I like is The Ten-Day MBA by Steven Silbiger. This book introduces you to all important aspects of finance and business like marketing, accounting, economics, and strategy. It gives you enough knowledge to understand the conversations in finance and business world.

These five steps should give you strong enough foundation in finance and business. However, if you want to move beyond these five steps, I’d recommend reading the books listed in the Personal MBA. The list contains 42 books and periodicals which aim to give you finance and business knowledge comparable to someone taking an MBA program.

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Starting a student investment club begins with the desire to invest. An adult should start and run the club and provide structure and guidance along the way. Properly used, however, the student investment club will be a good learning experience for everyone.

1. Begin with a simple goal’s to provide kids with limited ability to search and select stocks to invest. Ensure that younger kids have their parent’s permission to participate. Come up with weekly or monthly goals for investing.

2. Write rules and stick to them. Investment clubs need rules and regulations and the student investment club is no exception. This helps to establish order and ensure that things are handled properly. Write the rules in plain language that can be easily understood by the age group.

3. Limit the investments. Children have limited funds so there should be low limits on the participation requirements as well as limits to the amount the child can invest. Get the buy-in of the parents before you begin. Always consider the amount of money available to students before you choose investments.

4. Make investments fun. The idea of investments can seem somewhat a dreary subject. Spice it up by allowing kids to invest in companies that they know or have heard about. Think about popular toy or video game companies, food or restaurant companies or clothing companies. Investing in a stodgy company they never heard of and don’t know the nature of business will make the club boring and kids will lose interest quickly.

5. Encourage kids to use their own money. When appropriate the students will learn better when they use their own money. Whether it’s from their allowance or from a part-time job, using their own money will force kids to be more interested in the investments.

6. Invite guest speakers. Whenever possible try to add interest by inviting guest speakers to meetings with the students. Find members of the local community to speak such as investment bankers, finance counselors or accountants.

7. Divide students into smaller groups. If you have a large group of students, it may be wise to have them form smaller groups. Allow them to form a corporation for investing and even let them name their company. Have them choose a president and then let them vote on investment choices.

8. Track investment performance. Teach students to use charts or graphs to track their investments and keep abreast with market trends in the newspaper or on the internet. Determine a specific day in a week to review investments with the students.

Source: http://www.articlesbase.com/fitness-articles/how-to-start-a-student-investment-club-252081.html
Author: Alvin Toh

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Do Your Homework – If you were going to purchase a new car, you would do quite a bit of research before making a final decision and a purchase. You would never consider purchasing a car that you had not fully looked over and taken for a test drive. Investing works much the same way.You will of course learn as much about the investment as possible, and you would want to see how past investors have done as well. It’s common sense!

As a potential investor, you should read anything you can get your hands on about investing but start with the beginning investment books and websites first. Otherwise, you will quickly find that you are lost.

Learn From The Experts – Learning about the stock market and investments takes a lot of time but it is time well spent. There are numerous books and websites on the topic, and you can even take college level courses on the topic which is what stockbrokers do.

Test Run – While the person who sold you your brand new car or ipod will provide you with a 30 day money back warranty, there is no such thing as money back warranty in stock investment.
Once the money’s gone,its gone forever and that could be your life savings!

With access to the Internet, you can actually play the stock market with fake money to get a feel for how it works.Do a search with any search engine for “Stock Market Games” or “Stock Market Simulations.” This is a great way to start learning about investing in the stock market.

Speak with a Financial Planner – Finally, speak with a financial planner. Tell them your goals, and ask them for their suggestions, this is what they do.A good financial planner can easily help you determine where to invest your funds, and help you set up a plan to reach all of your financial goals. Many will even teach you about investing along the way,make sure you pay attention to what they are telling you!

Different Types of Investments – Overall, there are three different kinds of investments. These include stocks, bonds, and cash. Sounds simple, right? Well, unfortunately, it gets very complicated from there. You see, each type of investment has numerous types of investments that fall under it.

There is quite a bit to learn about each different investment type. The stock market can be a big scary place for those who know little or nothing about investing. Fortunately, the amount of information that you need to learn has a direct relation to the type of investor that you are. There are also three types of investors: conservative, moderate, and aggressive. The different types of investments also cater to the two levels of risk tolerance: high risk and low risk.

1.Conservative Investors – Conservative investors often invest in cash. This means that they put their money in interest bearing savings accounts, money market accounts, mutual funds, US Treasury bills, and Certificates of Deposit. These are very safe investments that grow over a long period of time. These are also low risk investments.

2.Moderate Investors – Moderate investors often invest in cash and bonds, and may dabble in the stock market. Moderate investing may be low or moderate risks. Moderate investors often also invest in real estate, providing that it is low risk real estate.

3.Aggressive Investors – Aggressive investors commonly do most of their investing in the stock market, which is higher risk. They also tend to invest in business ventures as well as higher risk real estate. For instance, if an aggressive investor puts his or her money into an older apartment building, then invests more money renovating the property, they are running a risk. They expect to be able to rent the apartments out for more money than the apartments are currently worth or to sell the entire property for a profit on their initial investments. In some cases, this works out just fine, and in other cases, it doesn’t. It’s a risk.

Before you start investing, it is very important that you learn about the different types of investments, and what those investments can do for you. Understand the risks involved, and pay attention to past trends as well. History does indeed repeat itself, and investors know this first hand!

The Importance of Diversification – “Don’t put all of your eggs in one basket.” We have all probably heard of this advice and when it comes to investing, it is very true. Diversification is the key to successful investing. All successful investors build portfolios that are widely diversified, and you should too!

Diversifying your investments might include purchasing various stocks in many different industries. It may include purchasing bonds, investing in money market accounts, or even in some real property. The key is to invest in several different areas not just one.

Diversification May Bring Better Returns – Over time, research has shown that investors who have diversified portfolios usually see more consistent and stable returns on their investments than those who just invest in one thing. By investing in several different markets, you will actually be at less risk also.

For instance, if you have invested all of your money in one stock, and that stock takes a significant plunge, you will most likely find that you have lost all of your money. On the other hand, if you have invested in ten different stocks, and nine are doing well while one plunges, you are still in reasonably good shape.

Diversification Plans – A good diversification will usually include stocks, bonds, real property, and cash. It may take time to diversify your portfolio. Depending on how much you have to initially invest, you may have to start with one type of investment, and invest in other areas as time goes by.

Lower Your Risk – If you can divide your initial investment funds among various types of investments, you will find that you have a lower risk of losing your money, and over time, you will see better returns. Experts also suggest that you spread your investment money evenly among your investments. In other words, if you start with $100,000 to invest, invest $25,000 in stocks, $25,000 in real property, $25,000 in bonds, and put $25,000 in an interest bearing savings account.

Source: http://www.articlesbase.com/investing-articles/how-to-invest-successfully-469598.html
Author: Paul Hata

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With posting boards additional documents or records can be produced whilst the entry is being made. If a statement form is filed with each ledger account it can be inserted under the spring clip at the same time as the ledger sheet; thus one writing will produce the sales journal, the ledger, and the entry on the statement. At the end of the month all that is necessary is to extract the statements and mail them to the customers.

Although, as an example, a detailed description has been given of the sales section of the accounts department, it should be realized that the posting- board method can be adopted for other entries. In dealing with cash received it is possible to produce at the same time the receipt, the cash book entry and the bank paying-in-slip. Whilst writing a cheque, entries can be made un the cash book and purchase ledger. Throughout the accounting system, and indeed for other purposes, wide use can be made of manifold posting equipment.

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The method described in this section is useful for small business, and also form the basis for mechanical accounting systems. It has important applications un the use of computers by providing basic accounting procedures. There must be a rigid check on the accuracy of the input to a computer system; if the wrong data is put into that system then the wrong answer will be produced- “garbage in, garbage out”. One of the controls of the input system is to have check total produced at the point transactions arise or original documents are prepared. The method illustrated and described in this section would provide some of these check totals.

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An additional advantage of the slip system us that invoices can be sorted un the required order for entering in the ledger. It must be emphasized that where use us made of simplified methods a strict control must be kept since the normal book- keeping checking methods can not be used.

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Manual Methods

Simplification of accounts, particularly in the smaller firm, does not of necessity mean the purchase of expensive equipment or machines. Consider first the question of balancing the ledger accounts. This must be completed at least monthly for the collection of debt and payment of suppliers, and also at the end of the accounting period to produce the necessary schedules of debtors, creditors, expenses, etc. In connection with the ledger the first simplification which might be considered us the adoption of the three- column ledger- debit, credit, balance. Under this method the balance of the accounts is thrown out after each entry, thus eliminating the necessity at the end of the month or accounting period of ruling and balancing.

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Stocks are pieces of ownership in a company. Also called shares, they represent a part of the shareholder’s interest in the company’s profits and assets, but not necessarily liabilities.

Some stocks earn you a regular payout, called a dividend – which is your reward for investing your money in that stock. You can also sell stocks at a higher price than the one you bought them for to make a profit.

The stock market is like an auction house where shares are bought and sold and buyers and sellers determine a price by bidding on stocks.

Stock prices fluctuate, sometimes wildly, during the day of trade, as buyers and sellers drive the stock’s demand and supply.

Companies don’t trade stock directly; instead once they have offered the stock to the public in an Initial Public Offering, they then let buyers and sellers directly determine demand without interference.

A stock exchange is a place that facilitates the trade of stock.

When you want to buy stock in a company, you call a brokerage firm and open an account with them. Alternatively you can use an online broker.

To set up an account with a brokerage, you need proof of identity – social security or drivers’ license.

Generally, greater risk in the stock market means a higher return, although this isn’t always true.

Stock tables appear in your daily newspaper and contain important information to help you monitor your stocks – you should read this everyday.

Your personal finances should be in good shape and you should have some spare cash for stock investing as it can be a time-confusing, and for the novice, risky venture.

You should read books, magazines and internet articles on stock market tutorials to better acquaint yourself with the market’s dynamics.

The three main stock indexes in the US are the Dow Jones Industrial Average, the NASDAQ, and the S&P 500.

The main stock exchange in the US is the New York Stock Exchange (NYSE), where most blue-chip stocks are listed.

A company’s stock cannot be traded at the exchange if it is not first listed on that exchange.

The stock market is a place of much fervent daily activity. It’s constantly in the news and very sensitive to changes in the world’s economic and political climate. To make sense of it, you must give yourself at least 6 months to a year to fully understand its intricate workings. You can, however, begin to start investing small amounts and learn as you invest because after all, experience is the best teacher. This stock market tutorial should have given you an idea of the basics; now you can easily explore the concepts outlined here in more depth for greater understanding and ultimately higher returns.

Source: http://www.articlesbase.com/investing-articles/a-quick-stock-market-tutorial-15-tips-for-beginners-1695806.html
Author: Kelly Clifford

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